FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH PROGRAMS

1
FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH
PROGRAMS

• Shirley M. Warren
• Society of Research Administrators
• October 2005

2
Acronyms

• AMC Academic Medical Center
• ASOC Above Standard of Care
• CAS Cost Accounting Standards
• CDM Institutional Charge Master Code
• CPT Current Procedural Terminology
• CTA Clinical Trial Agreement
• F A Facility and Administrative
• SOC Standard of Care

3
Academia provides..

• Knowledge
• Education of future scientists
• Patients
• ALSO must preserve tax-exempt status

4
Overview

• Clinical trial market is competitive
• Academics health centers are obtaining fewer
  trials
• Clinical trial budgets typically follow a
  business model vs. cost recovery model

5
Overview

• Important that patient costs in the CTA, consent
  form and study budget align
• Different internal parties in the process do not
  partner resulting in discrepancies
• Lack of interaction between parties leaves all
  research parties vulnerable

6
Clinical Trial Framework

• Highly regulated
• Complex
• Account management problems can be traced back to
  procedures well before first participant is
  enrolled into clinical trial

7
Grant vs. Clinical Trial

• Grants are accrual based accounts
• Clinical trials regarded as cash based accounts

8
Federally Sponsored

• Distinguish administrative time from patient care
  time
• Subject stipend, travel, per diem are under
  other

9
F A Costs

• Federally negotiated rate
• Patient care often excluded
• Institutional rate for clinical trials
• Exclude IRB fees, other administrative costs

10
Fixed Price Pitfalls

• Industry budgets are revenue oriented, not cost
• PI/Institution must know costs to accept study
  without cost sharing
• Define Standard of Care on the front end, not
  during the study be consistent

11
CAS Complications

• CAS requires all costs be charged and recovered
• Account budget authority is usually on cash
  accrual basis

12
CAS Implications

• Establish account for hospital services
• Protocol revisions - submit new budget, get new
  contract end dates

13
What Does the Subject Pay for?

• Some oversight or linking to IRB and other
  departments
• Third party payer does not determine standard of
  care

14
Managing Cash Flow

• Slow payments lead to frustration and resentment
• If no private practice revenue, slow payments
  threaten viability
• Timing of grant payments rarely come close to
  matching the timing of costs
• Money is spent long before revenue received

15
Cost Meter is Running

• Sites spend as much or more than 10K on
  planning, developing and initiating a clinical
  trial BEFORE a subject ever enrolled
• Typically a CTA states 10-25 available for study
  start
• Takes about 4-6 weeks to receive start up funds
  once the contract signed

16
Hidden Costs

• Low estimate on staff time
• Ancillary costs
• Fringe benefits
• Inflation

17
Advertising Costs

• Cost/subject randomized
• Lack of incorporation into the CTA

18
Travel

• Investigator meetings
• Local travel
• Clinic
• Home visits

19
Other Costs

• Stipends
• Reimbursement for mileage
• Shipping of samples, films, etc
• Repeating samples, procedures

20
Other Hidden Costs

• Extended recruitment
• Partial subjects
• Long term storage of study records
• Monitor Visits
• FDA Audits

21
Other Hidden Costs

• Premiums for overtime, extra-pay shifts, and
  multi-shift work must be have prior approval
• On-Call time

22
Lab Requisitions

• Identify the requisitions as research related
• Potential pitfall Charge automatically ends up
  on the patients bill

23
Supplemental Funding

• Difficult studies
• Unanticipated expenses
• Justification letter
• Renegotiate budget

24
Foreign Sponsors

• Request payment in US dollars
• Define exchange rate

25
It Takes a Village

• Multi-team approach
• Patient Registration
• Hospital Patient Billing
• Professional Billing
• Coordinators
• Department Grants Manager
• Compliance

26
Tracking Study Accounts

• Accounts Receivable
• Accounts Payable
• Because clinical trial account are study visit
  driven, difficult to track cash intake and outflow

27

• Management Challenges

28
Management Challenges

• Recovering cost for sponsor decisions
• Studies placed on hold
• Studies closing early
• Payments based on monitoring visits
• Payments based on locked database

29
Management Challenges

• Incentive payments
• How to handle appropriately
• Institutional policy

30
Management Challenges

• Adverse Events
• Discrepancies between clinical trial agreement
  and informed consent
• Billing 3rd party payors
• Responsibility for the research-related injuries
• Responsibility for follow-up care for a
  research-related injury

31
Management Challenges

• Medicare
• Be mindful of the Medicare National Coverage
  Decision (NCD) and states regulations regarding
  Medicaid
• Medicare General Guidelines
• Medicare Device Guidelines
• Medicare D January 2006
• http//www.cms.hhs.gov/coverage/8d2.asp

32
Medicare vs. Private Payors

• Private payors preauthorize
• Medicare do not preauthorize

33
GENERAL MEDICARE PAYMENT PRINCIPLES

• No payment for covered services if other funding
  (such as payment from a research sponsor) covers
  the cost
• No payment for medically unnecessary care
  (including experimental or investigational care)
• Costs of usual patient care given in conjunction
  with a research study are generally reimbursable
  if such costs are not already met by research
  funds
• Special rules for investigational devices (Class
  A/B) and investigational drugs (generally no
  coverage if not FDA approved)
• National Coverage Decision for Clinical Trial
  Services (Sept. 2000)
• Covered routine costs include items and
  services otherwise generally available to
  Medicare beneficiaries that are provided in
  either the experimental or the control arms of a
  qualifying clinical trial
• Rules are complicated and challenging for most
  institutions
• to implement as a practical matter
• 
  - Mark Barnes Ropes Gray LLP
• 
  2004

34
Management Challenges

• If you believe you are hurt or if you get
  sick because of something that is done during the
  study, you should call _____________ (PIs or
  medical supervisors name) at _____________
  immediately. It is important for you to
  understand that the INSTITUTION will not pay for
  the cost of any care or treatment that might be
  necessary because you get hurt or sick while
  taking part in this study. That cost will be
  your responsibility. Also, the INSTITUTION will
  not pay for any wages you may lose if you are
  harmed by this study.
• Medical costs that result from research-related
  harm can not be included as regular medical
  costs. The INSTITUTION is not allowed to bill
  your insurance company. You should ask your
  insurer if you have any questions about your
  insurers willingness to pay under these
  circumstances. Therefore, the costs related to
  your care and treatment because of something that
  is done during the study (add study specific
  language here . will be your responsibility or
  will be paid by the sponsor or the sponsor has
  agreed to pay up to XXX of all those costs or
  your insurer has agreed to pay all those costs).

35
AMA Ethical Guideline E-8.0315

• (5) Physicians should ensure that protocols
  include provisions for the funding of subjects
  medical care in the event of complications
  associated with the research. Also, a physician
  should not bill a third-party payor when he or
  she has received funds from a sponsor to cover
  the additional expenses related to conducting the
  trial.

36
Management Challenges

• Study account residual dollars
• Who controls the residual dollars
• Incentive for investigator not to cost out study
  properly
• Motivation to conduct trial
• Tax consequences for AMCs

37
Management Strategies

38
Management Strategies

• Understand cost at your site
• Choose studies which can enroll participants

39
Management Strategies

• How long can you go before enrolling first
  participant?
• Know the breakeven point

40
Management Strategies

• Establish flexibility to cover pass through
  costs
• Negotiate screening/enrollment costs
• Evaluate payment schedule/milestones

41
Review of Financial Obligations During the Life
of the Study

• Communication
• Track
• Review
• Reconcile
• Payment of study costs
• Awareness of breakeven point
• Invoice Sponsor

42
Account Closure

• Business manager and coordinator review it all
  again
• Reconcile any inconsistencies

43
Metrics for Good Clinical Trial Management

• Metrics relate to the measurement, involving or
  proceeding by measurement
• Metrics that exist in clinical studies
• speed
• quality
• quantity
• cost

44
Why Use Metrics?

• Evaluate current process
• Develop relevant analysis plan
• Evaluate data
• Validation of process or mandates change

45
Future of Clinical Research at AMCs

• Dependent on budget preparation
• Contractual payment information
• Subject Accrual
• Grants maintenance
• Grant reconciliation

46
Develop Best Practices for Business Model

• Develop internal metrics to develop best business
  practices
• Buy In
• Fiscal Compliance

47
Fiscal Best Practice Outcome

• Develop standardized workflow within the
  institution to avoid inconsistencies.

48
Fiscal Best Practice Outcome

• Study budget should specifically outline the
  fair market value of all services provided to
  clarify how many procedures are eligible to be
  billed to third parties, and what
  co-pays/deductibles will be the responsibility of
  study participant.

49
Fiscal Best Practice Outcome

• Implement internal monitoring process on a
  regular basis to assist with identifying and
  problem resolution.

50
Fiscal Best Practice Outcome

• Institutional purchase or development of grant
  management software.
• Integration of software with the regulatory
  and data management.

51
Fiscal Best Practice Outcome

• Standard of Care determined when study budget
  developed.

52
Fiscal Best Practice Outcome

• Spend and bill as budgeted (corporate
  compliance).

53
Good Fiscal Stewardship

• Balance enthusiasm with facts
• Educate, Educate, Educate!

54
FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH
PROGRAMS

• Shirley Warren
• Society of Research Administrator
• October 2005